G.R. No. 67548 December 20, 1989
IRENEO ODEJAR, LIBRADA ODEJAR, and JUANITO ODEJAR, as heirs of the deceased spouses AMBROCIO ODEJAR and GLICERIA GIBAS, petitioners, vs. ISIDRO P. GUICO, EMMANUEL GUICO and LOURDES G. AMORANTE, respondents.

FACTS

The case originated from the estate of Lt. Roberto Tamisin, who died in 1942. His widow, Paula Odejar, died in 1944. Her parents, the Odejar spouses, successfully litigated against the Tamisin family (Lt. Tamisin’s father and siblings) to recover her conjugal share in his arrears of pay. A 1953 judgment ordered the Tamisins to pay the Odejars. Shortly after this adverse judgment, defendant Rufino Tamisin sold a parcel of land to Fermina Maluto (wife of Isidro Guico, who was a brother-in-law of a Tamisin sister). The Odejars, as judgment creditors, levied upon this and other Tamisin properties in execution, eventually acquiring them at a sheriff’s sale in 1954 after the judgment became final.
In 1975, over twenty years later, the Guicos and their co-respondents filed an action to quiet title, claiming ownership of the land based on the 1953 sale from Rufino Tamisin. They argued the Odejars’ claim was barred by prescription and laches. The trial court dismissed the complaint, but the Court of Appeals reversed, holding the action to annul the 1953 sale had prescribed. The Odejars appealed to the Supreme Court.

ISSUE

Whether the action filed by the respondents (Guicos, et al.) to quiet title can prosper, or whether the 1953 sale from Rufino Tamisin to them was void and could be attacked collaterally at any time by the Odejars as judgment creditors.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s dismissal. The Court held the 1953 sale was a simulated or fictitious transaction executed in fraud of creditors. The sale occurred immediately after an adverse judgment, for a low price, between close relatives (brother-in-law), and the vendors allegedly remained in possession. Such a contract is void ab initio under Article 1409 of the Civil Code for being absolutely simulated and lacking cause or consideration. A void contract produces no legal effect and is deemed nonexistent.
Consequently, the legal logic is that an action to declare the nullity of a void contract does not prescribe. The right to assert its nullity can be raised at any time, either directly or collaterally. The Odejars, as judgment creditors who had levied upon the property, were not required to file a separate action for annulment. They could rightly treat the simulated sale as void and ignore it, pursuing execution against the property as still belonging to the judgment debtor, Rufino Tamisin. The respondents, deriving title from a void contract, acquired no valid title to assert. Therefore, their action to quiet title had no legal basis. The defense of prescription and laches was unavailing against a claim based on a void contract.